FROM AN EXPERIENCE
Discussing with developing traders, I’d say that 90% don’t/can’t sustain the process of keeping a substantive journal. Among the group that does journal, well over 90% of the entries are about themselves and their P/L. I almost never see journal entries devoted to figuring out markets.
-A sizable proportion of traders who have been having problems are trading methods and patterns that used to work, but are no longer operative. The inability to change with changing markets affects traders intraday (when volume/volatility/trend patterns shift) and over longer time frames (when inter-market patterns shift).
-Some traders habitually look for tops in a rising market and bottoms in a falling one. There’s much to be said for counter-trend methods, but not when the need to be right exceeds the need to make money.
-An underrated element in trading success is mental flexibility: the ability to shift views and perceptions as new data enter the marketplace. It takes a certain lack of ego to form a strong view and then modify it in the face of new evidence.
-Many traders fail because they’re focused on what the market should be doing, rather than on what it is doing. The stock market leads, not follows, economic fundamentals. Some of the best investment opportunities occur when markets are looking past news, positive or negative.
(to be contd)
WATCH YOUR THOUGHT PROCESS
Developing “The Trader’s Mindset” is a must for trading success and this can take some time. This is not an area where you can take a short cut or learn a formula. You usually develop it by actually trading and the experiences you gain from trading. We will help guide you towards developing “The Trader’s Mindset” and help you handle account draw-downs, losses, and profits. Yes, profits can actually cause you stress!
You can see how powerful psychology in trading is, if you show the same successful trading approach to one hundred different traders. No two of them will trade it exactly the same way. Why? Because each trader has a unique belief system and their beliefs will determine their trading style. That is why even with a profitable and proven trading approach, many traders will fail. They do not have the proper belief system to enable them to trade well. In other words, they lack “The Trader’s Mindset.”
When you encounter psychological issues it is best to recognize the issue, just be aware of it, don’t deny it. In order to “fix” psychological issues we as human beings must first become aware of the problem and issues causing the problem in order to heal and “fix” the problem. This is much of what psychoanalysis is all about. The psychologist or psycho- therapist tries to let the patient first see the problem and then the patient must believe that these issues are causing the problem in order for the patient to heal. The reason this process can take so long, perhaps even years is because the patient needs to not only recognize their problems, but must accept that there truly is a problem. They must take responsibility for their problems to heal.
Success in trading is a direct result of a sound trading system, sound money management, proper capitalization, and sound psychology. All of these must be in sync to be successful in your trading. The “ART” system is designed to focus on all of these areas. The only area where you may need additional help once you have mastered your trading skills, is your psychology.
Psychology is the one area that you may need additional help and can take up to a year or so to resolve personal issues attaining trading success. Our consultation services focus on this aspect and if you find yourself struggling with psychological issues, you owe it to yourself to get help in this area.
Here is a list of common psychological trading issues and their causes:
Fear Of Being Stopped Out Or Fear Of Taking A Loss: The usual reason for this is that the trader fears failure and feels like he or she cannot take another loss. The trader’s ego is at stake.
Getting Out Of Trades Too Early: Relieving anxiety by closing a position. Fear of position reversing and then feeling let down. Need for instant gratification.
Adding On To A Losing Position (Doubling Down): Not wanting to admit your trade is wrong. Hoping it will come back. Again, ego is at stake.
Wishing And Hoping: Not wanting to take control or take responsibility for the trade. Inability to accept the present reality of the market place.
Compulsive Trading: Drawn to the excitement of the markets. Addiction and Gambling issues are present. Needing to feel you are in the game.
Anger After A Losing Trade: The feeling of being a victim of the markets. Unrealistic expectations. Caring too much about a specific trade. Tying your self-worth to your success in the markets. Needing approval from the markets.
Excessive Joy After A Winning Trade: Tying your self-worth to the markets. Feeling unrealistically “in control” of the markets.
Limiting Profits: You don’t deserve to be successful. You don’t deserve money or profits. Usually psychological issues such as poor self-esteem.
Not Following Your Proven Trading System: You don’t believe it really works. You did not test it well. It does not match your personality. You want more excitement in your trading. You don’t trust your own ability to chose a successful system.
Over Thinking The Trade, Second Guessing Your Trading Signals:
Fear of loss or being wrong. Wanting a sure thing where sure things don’t exist. Not understanding that loss is a part of trading and the outcome of each trade is unknown. Not accepting there is risk in trading. Not accepting the unknown.
Fear of loss or being wrong. Wanting a sure thing where sure things don’t exist. Not understanding that loss is a part of trading and the outcome of each trade is unknown. Not accepting there is risk in trading. Not accepting the unknown.
Not Trading The Correct Position Size: Dreaming the trade will be only profitable. Not fully recognizing the risk and not
understanding the importance of money management. Refusing to take responsibility for managing your risk.
understanding the importance of money management. Refusing to take responsibility for managing your risk.
Trading Too Much: Need to conquer the market. Greed. Trying to get even with the market for a previous loss. The
excitement of trading (similar to Compulsive Trading).
excitement of trading (similar to Compulsive Trading).
Afraid To Trade: No trading system in place. Not comfortable with risk and the unknown. Fear of total loss. Fear of ridicule.
Need for control.
Need for control.
Irritable after the Trading Day: Emotional roller coaster due to anger, fear, and greed. Putting too much attention on trading
results and not enough on the process and learning the skill of trading. Focusing on the money too much. Unrealistic trading expectations.
results and not enough on the process and learning the skill of trading. Focusing on the money too much. Unrealistic trading expectations.
Trading With Money You Cannot Afford To Lose Or Trading
With Borrowed Money:
Last hope at success. Trying to be successful at something. Fear of losing your chance at
opportunity. No discipline. Greed. Desperation.
Last hope at success. Trying to be successful at something. Fear of losing your chance at
opportunity. No discipline. Greed. Desperation.
These are by no means all the psychological issues but these are the most common. They usually center around the fact that for one reason or another, the trader is not following their chosen trading approach or system. And instead prefers to wing it or trade their emotions which in trading will always get you in trouble. So, I think you can see how psychology is all important in trading.
Our goal as traders in regards to psychology is to maintain an even keel so to speak when trading. Our winning trades and losing trades should not affect us. Obviously we are trading better when we are winning, but emotionally we should strive to maintain an even balance emotionally in regards to our wins and our losses.
It will happen when it happens and when you achieve this level of mental ability; it will come after working long and hard on your problems, but will come without you knowing it. It usually happens when you least expect it.
Below is a list of what one feels after acquiring “The Trader’s Mindset.”
-Sense of calmness -Ability to focus on the present reality -Not caring which way the market breaks or moves -Always aligning trades in the direction of the market, flowing with the market -Not caring about the money -Always looking to improve your skills -Profits now accumulating and flowing in as your skills improve -Keeping an open mind, keeping opinions to a minimum -Accepting the risk in trading -No Anger -Learning from every trade -Winning and losing trades accepted equally from an emotional standpoint -Enjoying the process -Trading your chosen approach or system and not being influenced by the market or others -Not feeling a need to conquer or control the “market” -Feeling confident and feeling in control of “yourself” -A sense of not forcing the markets or yourself -Trading with money you can afford to risk -No feeling of ever being victimized by the markets -Taking full responsibility for your trading
When you can read the list above and genuinely say that’s me, you have arrived!THE TRADERS MINDSET
Trading in the stock market is a good deal more than merely having a good knowledgeable grasp of the financial investment sector. Anybody getting in this line of work must understand that having absolute commitment or natural ability isn't sufficient. The difference between success and failure frequently boils down to the emotional and psychological nature of the trader's mentality or mindset!
There are numerous forms of trading in today's financial markets, including trading in stocks or options, bonds or futures, currencies or Forex. The usual theme in all of these are that while they all hold possible profits in addition to risks, everyone of them depends on having the right trader's mind-set to attain a higher success rate. Being aware of when to enter a trade, or when to get out, or how to be coolheaded in a unstable market are critical skills for any trader. Mindset controls our emotional ability to carry on with all the facets of trading and has a immense influence on winning and losing, success and failure.Our trader's mentality can be changed by the promise of vast profits, in addition to the dread of a abrupt or out of the blue decline in the market.
Basic human nature orders that we respond to a greater extent more powerfully to fear, and can consequently make foolhardy decisions. Fear of turning a loss, or looking stupid in front of our peers or co-workers changes the way our mind-set works, thus rather than taking a step back and reexamining the situation, we rush ahead and make possibly disastrous moves.
The trading market is built upon the cornerstone of optimism, the hope that our investments will make us profit. But hope isn't sufficient; a savvy trader's mind-set needs to be tuned up into to the fact that hope can also be destructive. You must also be able to define these hopes by qualifying the rationality for keeping to a position, as wishing its incline in the market would be just that - hopeful thinking!
At last, the most crucial emotion in the trader's mind-set. Greed. We fall upon greed in all walks of life, but in the trading line, greed can have colossal consequences on a individual life. Being on a winning streak has the outcome of making us over-confident or even cocky, and the hope of the get rich quick scenarios can and will be our greatest downfall. While there is a microscopic chance that we could make a killing in one fell swoop, a greedy trader's mentality will only result in huge failure in the end.
Understanding the psychological science of the trading market can not only help you change the way you deal with your own emotions. Being able to recognize these failings in your competitors gives you the power to use your new improved trader's mind-set to capitalize on any situation!
Day trading is often said to be a difficult or even impossible way of making money out of financial markets. The detractors often claim that unpredictable market movements during the fast intra-day time-frames make it nearly impossible to find a reliable day trading strategy, and that short time-frames are too fast to trade on, so that there is little time to analyze the market and form a well-considered plan of action. They also typically quote the supposed high number of investors who fail to make money and who either later quit or move on to other kinds of trading.There are various problems with this argument as it stands. It may be true that the markets are nervous, patterns unpredictable and that there is a higher drop-out rate than with other trading activities, but it is possible to address these issues.
The number of people who fail at anything attempted is always high - mostly people try something, find out it is not for them and move on. This is especially true of any ambitious venture, including those for making a lot of money. For day trading the Forex markets, it is often quoted that 90%, 95% or even 99% of first time traders fail to make any money and move on.
Though probably close to the mark, in some ways these figures are moot. Most of these people are not really committed to the venture. They quite possibly have some other motive enticing them into trading. They may be tired and jaded with their day job, burned out, in financial straits or otherwise desperate for a change of lifestyle and better quality of life. It is a foregone conclusion that they will fail at trading, at least as long as they remain subject to these personal circumstances.
Trading is a skilled and disciplined science and art that actually can be rewarding, but it requires a lot of work and the right mindset to succeed.
The failure rate among truly committed students of trading is likely to be much lower than these oft-quoted figures of 90% and above.
There may well be a higher failure rate among beginning day traders than is the case with other kinds of trading, because strategies and tactics are wrongly transferred and applied from longer term trading regimes.
For example, one must be much more cautious about using wave pattern and Fibonacci analysis in fast intra-day charts. These patterns, while they may still be discerned, are more elastic, more difficult to spot and so provide a poorer set of technical indicators than is the case in long-range markets.
Highly experienced investors may well be better placed to trade in general and have the experience, skill and patience to trade the market long-term. But beginners need to acquire that sense of inner certainty in order to enable their confidence to grow, and so benefit greatly from a shorter timeframe for completing tasks and evaluating their progress.
For similar reasons, the more casual trader will certainly benefit from the more immediate results that arise from intra-day trades.
We then come on to the more important question - does anyone succeed at day-trading? If so, what are the most important points of consideration that separates these investors from those who are less successful?
It is certainly the case that day trading is practiced by many individual traders and also by the larger financial institutions, such as banks and hedge funds. Proprietary traders also day-trade. If we look at these institutions and the minor investors who follow their movements, certain recurring features can be seen. Because of the rapid movements and changes in price action, most strategies are price-based, rather than following indicators.
By that I mean the main actions like entry, exit, updating contingent orders and so on, are determined by observations on the price, levels of support and resistance and fast cycle patterns. Also trading hours are all-important in day trading.
Trading is only carried out at times when it is more or less guaranteed the price will frequently move a significant amount in one direction, except in rare circumstances during periods of high volatility.
While price is all important in day trading, watching some indicators is beneficial in so far as it can help spot changes in cycle, therefore direction, and identify trend presence and changes.
With these tools the small time day trader can analyze the market on an ongoing basis and follow what the big players are doing. Grid trading, stop hunting and hedging news events are among the tactics that can be incorporated into a day trading strategy.
In conclusion, those contemplating day trading should not be put off by the often negative press this receives, but should be aware that it is an art on its own and learn the particular approach instead of just following the more widely known general trading strategies.
TODAY’S DAY TRADING STRATEGY
OF NIFTY FUTURES – SEPT 6
Slide upto 5447 is seen if trades below 5491 for 30 minutes and breaks 5467
On the other side
If crosses 5500 with good volumes hike upto 5530-45 is very much possible in the same session
So
Buy @ 5505 for a target of 5535
Or
Sell @ 5465 for a target of 5445
BANK NIFTY
Tends to touch 10945-35 below 10971
Oscillation between 10945 & 11007 is expected
in a normal opening for few hours.
Hence
Never buy below 11010
Never sell above 10935
Both are traps.
Buy btwn 10998-11015
T1- 11042-55
T2- 11068-85
Sell btwn 10944-27
T1- 10901-87
T2- 10875-58
Nifty, Bank Nifty levels and intraday news updated here gives astonishing success rate (more than 97%) that is more than enough for the readers to attain a decent profit daily.
To mint much more money,
pls subscribe our service and
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SHARE TIPS TODAY
Sell JSWSTEEL @ 1060
T1 – 1055
T2 – 1045
T3 – 1040
Sell HINDPETRO @ 509
T1 – 506
T2 – 501
T3 – 496
WHAT ASTROLOGY SAYS THIS WEEK?
Planetary position during September 2010
Sun will transit from Leo sign.
Mercury will transit from Leo sign. Mercury will retrograde.
Venus will transit from Libra.
Moon will transit from Cancer, Leo and Virgo..
Mars will transit from Virgo.
Sun will transit from Leo sign.
Mercury will transit from Leo sign. Mercury will retrograde.
Venus will transit from Libra.
Moon will transit from Cancer, Leo and Virgo..
Mars will transit from Virgo.
Mars will transit from Libra from 7th September 2010
Rahu will transit from Sagittarius.
Jupiter will transit from Pisces.
Rahu will transit from Sagittarius.
Jupiter will transit from Pisces.
Jupiter will retrograde.
Saturn will transit in Virgo.
Ketu will transit in Gemini.
Saturn will transit in Virgo.
Ketu will transit in Gemini.
An astro prediction for 6th September 2010
Transiting Moon will be passing through Cancer Zodiac sign. Transiting Moon will be in applying aspect with Transiting Jupiter, which indicates some profit booking will be seen during first trading session. Market may do business under pressure. Market trend may change after 13.50. Market may go up between 14.58 and 15.16. Market would gradually go up or nearer to previous closing during last trading session.
Transiting Moon will be passing through Cancer Zodiac sign. Transiting Moon will be in applying aspect with Transiting Jupiter, which indicates some profit booking will be seen during first trading session. Market may do business under pressure. Market trend may change after 13.50. Market may go up between 14.58 and 15.16. Market would gradually go up or nearer to previous closing during last trading session.
See the Power of Astrological calculation we will see big fall in Indian Stock Market. Looking at planetary position Indian Stock Market would be heavily volatile. Perhaps, there may be correction upto During last quarter of 2010. Exit all long position.
Disclaimer
On repeated requests of the readers this astral prediction is started.
Traders are advised to attain some technical knowledge before they get into trades anyway
-EDITOR
BELIEFS OF SUCCESSFUL TRADERS & UNSUCCESSFUL TRADERS
What separates a long-term successful trader/investor from an unsuccessful one? One of the main components is "mental game", as well as being systematic and organized. These are some of the traits and practices that I've found are in line with success:
Mindset and Practices of Successful Traders:
The markets provide an opportunity
The markets exist to give me profits
If I get stopped out then I have to reevaluate the trade
If the market doesn't do what I expect then I must reconsider
I'll take one trade at a time
I don't have to be perfect, I just have to do my best.
Money is not that important
Losing is part of the process of making money
Trading is a game, I know I can win
Every setback provides me with new market information
I can wait for an opportunity to come
Get pleasure from trading the market as an end in itself
Not motivated primarily by money
Confident that they can make money in the market
Not afraid to take a loss
Patient - waits for opportunities
Uses a highly planned strategy
Is well prepared, done his/her homework
Measures the risk/reward ratio of every trade
Mindset and Practices of Unsuccessful Traders:
I must be in the market now
If I lose on this trade I am a loser
If I wait for my trading rules I'll miss out
If I get stopped out I have bad luck
I can't lose money
The market makers got me again
I'm an idiot, how could I lose money
What will they think when I tell them I lost money on this one?
The stock market is rigged
It's impossible to get a good fill
I cannot take a loss
If I take my profit then I am right
Never define a loss
Locked into a narrow belief system
Hesitate to make a trade
Do not stick to a system
Trade by emotion
Have no consistent strategy
Do not practice risk management
More interested in proving themselves right then being a success
Bottom Line: Strive to put your trading/investing mindset into the first group of attitudes, and eliminate thoughts/beliefs from the second group. Shake off your bad trades and learn from them. A bad trade/investment does not make you a bad person, just as a winning trade does not make you infallible. Constantly keep improving, both as a trader and a person.
Trade Well!
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-Mahindeesh (a) Sathish
Cuddalore-2
Tamil Nadu
TODAY’S QUOTE
It is the function of art to renew our perception. What we are familiar with we cease to see. The writer shakes up the familiar scene, and as if by magic, we see a new meaning in it.
-ANAIS NIN,
RELAX CORNER
JUST SMS TO YOUR PAL
*Newspaper Mein News Lugi K
“50% Of Sardars Are Donkeys”
The Sardars Protested.
Next Day News Lagi K
“50% Of Sardars R Not Donkeys”
The Sardars Celebrated.
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